This article appears in the March 2017 issue of Potato Grower.
The USDA estimates that of the 2.1 million principal farm operators across the country, only 6 percent are under the age of 35; the average age of an American farmer has increased to 58 years old. As the number of farmers facing retirement continues to increase, the next generation of millennial farmers is entering the fields. Running an agriculture operation presents a unique set of challenges, but there are approaches to ensure the survival and success of any farm.
To ensure the family farm is operated carefully and efficiently, follow these five steps to keep your business future moving forward at all times.
- Expand upon education
Today’s young farmers are well-educated with a level of access to information that is unprecedented to any previous generation. A wealth of available resources is available to help along the path to success. Attending a conference, class or intensive workshop can help spotlight new skills and methods that positively affect agricultural operations. As techniques and technologies continue to evolve, it is essential that young farmers expand their knowledge base and apply new systems to build a profitable operation.
- Evaluate finances
It is important to recognize that a realistic budget, financial planning and risk management are some of the most valuable resources in maintaining a successful farm. Operators need to use caution when evaluating input cost for their operations and remember each expenditure requires careful planning and time investment. Evaluating and keeping track of financial records encourages both short- and long-term financial success. Not only will it help growers stay organized and make better management decisions, it makes it easier for a lender to assess a farm’s financial situation. Proper financial and business planning will also help expedite any effort toward obtaining funding, for either loans or grants for farm enterprise.
- Find a trusted adviser
Reliable and educated advisors are an incredibly valuable resource and are crucial in advancing a farm’s finance strategy. It’s essential for a grower to identify an advisor that is well-versed in the cyclical nature of the agriculture industry and can plan with him for every contingency that may arise. When working with an advisor, it is essential to clearly outline goals and define needs to determine how the partnership will complement the future of the farm. Advisers are there to guide growers in order to help meet financial needs and ensure objectives are achieved.
- Develop a succession plan
Succession planning is vital for farm operations to continue and support both the current generation and the next. Transferring a farm can be challenging, with issues such as legal matters, communication issues, tax laws, and personal differences to settle. A key step in this process is to start a conversation early among all family members about the long-term goals of the family farm. By developing a detailed, formal estate plan, a young grower can maintain a thriving farm and make sure the family’s vision and goals will be addressed and achieved.
- Anticipate Change
In the last few years, there has been a tremendous shift toward agriculture robotics. This rapid transition to automation can be incredibly exciting for the tech-savvy millennial farmer, but it’s important to stay focused on the farm’s primary objectives. Anticipating and embracing these technological advances can provide a competitive edge, but only after making an effort to evaluate what will affect the farm positively, whether it be new equipment or reducing the farm’s debt. Technology will continue to transform the agriculture industry by improving efficiencies and offsetting rising labor costs, but the key is to be realistic in order to be profitable.
Author Matt Duffy currently serves as senior vice president, regional bank manager in the Yakima, Wash., branch of Columbia Bank. Columbia Bank operates more than 140 banking offices and branches throughout Washington, Oregon and Idaho.